Amazon, Google, Microsoft battle to host developers

The Internet giants want to attract developers to build apps on their cloud-computing infrastructures.

Ophir Kra-Oz’s career has included many technological areas, with an emphasis on computing infrastructures. Beginning with his service in the Israel Defense Forces (IDF) 8200 military intelligence unit, continuing to found the start-up CloudShare, on to managing the EMC development center in Beersheva, to his current position as Product Manager for Google’s App Engine. But, in the past week, it has become clear that the product he is responsible for is at the center of a storm, or what some would call a real battlefield, between Google, Amazon, and Microsoft, and it is possible that IBM, SAP and Apple will soon join in the battle as well.

While most of us are familiar with Google from their popular search engine, email service, YouTube, and other office applications, under the internet giant’s hood is a vast infrastructure including, according to estimates, more than 30 giant server farms around the world that provide the computing support of all these services.

Over the last two years, the large Internet companies have started making their infrastructures accessible and available for services that are relevant to users, and also for development purposes. In other words, application developers can also use these infrastructures, for a fee, of course. The tacit assumption behind the scenes is that developing an application on Google/Amazon/Microsoft infrastructures will attract more users to the platform that they use for development purposes. So it is not surprising that the companies are engaged in power struggles over the attractiveness of their platforms to developers.

Two weeks ago, Google made an atypical move, and offered aggressive discounts for use of its development infrastructures. The company reduced its rates for storage and processing services by more than 30% for external app developers. The very next day there was a response, which, though anticipated, served to highlight the sensitive nature of the matter. Amazon Web Services (AWS) discounted some of its storage and processing services by 30-60%. A few days later, Microsoft lowered its Azure Platform prices by similar rates.

Complicated pricing

“The price reductions prove that the market is very competitive,” says Kra-Oz in the first response by a Google executive on the external app developer infrastructure price wars. According to Kra-Oz, “The pricing model for use of our infrastructures was simply too complicated, and that led to the creation of a new model.”

The pricing can, in fact, be complicated. Google provides access to roughly 70 products through its API (application programming interface), and using the various computing services to support development around these products can be overly complicated.

As for the competition, Kra-Oz claims that the model that Amazon is seeking to develop, which includes a long-term development commitment (Reserved Instances) in exchange for significant discounts (up to 60% for a 3-year commitment) is irrelevant. “The long-term commitment model is wrong. When you ask a start-up developer, for example, to take responsibility for his development environment three-years forward, it is impossible. The whole world could change in that time. It is basically taking money from the company’s investors, and transferring it to the service providers. This is the exact reason that companies don’t want to commit to buying hardware.”

Of course, there may be developers who will feel that investing in Amazon or Microsoft’s environment is a better financial fit. “Our goal is, through our computing infrastructure, to enable developers to provide user-experiences to clients. We believe that this is just the beginning, in terms of the solutions that Internet companies’ computing infrastructures provide for developers, and in the coming decade, we will see many more.”

Among the companies that use Google’s development environment is the photo messaging app SnapChat. Presumably, the company has a great deal of motivation to see Israeli start-ups joining in as well.

Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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